EU extends Swedish biofuels tax exemptions to 2030

The European Commission has approved Sweden's extension of tax exemption measures for certain biofuels used for heating or as motor fuel, until 2030.

Under two different schemes, Sweden exempts biogas used in heat generation and biogas used in motor fuel from energy and CO2 taxation. The commission's decision approves prolonging both schemes for 10 years, with two modifications: the tax exemption will only apply to non-food based biogas and it will be extended to include non-food based bio-propane.

The move represents a success for Sweden's bioenergy association Svebio, which last month rejected the government's proposal to introduce a tax on biofuels. The government in April proposed abolishing the exemption from energy tax and CO2 tax for taxable biofuels for heating, other than biogas. Svebio said it should request an extension of the tax relief approval for biofuels for heating and transport, and for biogas and hydrotreated vegetable oil (HVO).

The commission's decision has been welcomed by several public transport operators in Sweden, where many buses run on biogas.

The commission said that it found the exemptions were necessary and well-suited to stimulate production and consumption of domestic and imported biogas and bio-propane without distorting competition in the single market.

By Daniel Mackay